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Private Health Insurance (Council Administration Levy) Bill 2003

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2002-2003

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

PRIVATE HEALTH INSURANCE (COUNCIL ADMINISTRATION LEVY) BILL 2003

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Health and Ageing,

Senator the Hon. Kay Patterson)



 

PRIVATE HEALTH INSURANCE (COUNCIL ADMINISTRATION LEVY) BILL 2003

 

OUTLINE

 

The Australian National Audit Office Audit Report No. 32 1999-2000: “Management of Commonwealth Non-Primary Industry Levies”, identified issues with the Private Health Insurance Administration Council (Council) administration levy (established via subparagraph 82G(1)(h)(i) of the National Health Act 1953 ) having regard to the operation of section 55 of the Commonwealth of Australia Constitution (the Constitution). 

 

Section 55 provides that laws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect.

 

This Bill, together with three other Bills, reimposes four health insurance industry levies (and validates previous impositions of the levies) having regard to section 55 of the Constitution with a view to removing any doubt regarding the technical validity of the levies.

 

The four private health insurance industry levies being reimposed are:

 

§   the Private Health Insurance Administration Council administration levy (subparagraph 82G(1)(h)(i) National Health Act 1953 );

§   the collapsed organization levy (paragraph 82G(1)(j) National Health Act 1953 );

§   the Acute Care Advisory Committee (ACAC) review levy (subparagraph 82G(1)(h)(ii) National Health Act 1953 ); and

§   the Reinsurance Trust Fund levy (section 73BC National Health Act 1953 ).

 

These levies are to be reimposed via the following Bills:

 

§   Private Health Insurance (Council Administration Levy) Bill 2003;

§   Private Health Insurance (Collapsed Organization Levy) Bill 2003;

§   Private Health Insurance (ACAC Review Levy) Bill 2003; and

§   Private Health Insurance (Reinsurance Trust Fund Levy) Bill 2003.

 

The National Health Amendment (Private Health Insurance Levies) Bill 2003 amends the National Health Act 1953 making changes ancillary to, or consequential to, the reimposition of four private health insurance industry levies.

 

The reimposition effects a technical change in process.  The changes effectively repeal the existing levy mechanisms replacing them having regard to section 55 of the Constitution.  While the levies will still be administered by the Council, the money collected under the levies will be placed into the consolidated revenue fund and then appropriated for the purposes of those levies.

 

These levies only apply to the private health insurance industry.  Only registered health benefits organizations are required to meet liabilities imposed via the levies.  The purpose of the reimposition of the levies is not to increase the financial burden on the private health insurance industry.  This proposal does not involve a change in policy but rather corrects a technical defect to ensure that the legislation functions as intended.

 

Doubt in relation to the validity of the Council administration levy has the potential to substantially reduce or impede Council in undertaking its functions including the prudential regulation of the private health insurance industry.  Given the role of Council its financial basis should not be compromised by doubt in relation to section 55 of the Constitution.

 

Council administration levy

 

This Bill reimposes the Council administration levy.  The purpose of the reimposed Council Administration Levy is the same as in the current provision in subparagraph 82G(1)(h)(i) of the National Health Act 1953 .  A levy is imposed on each registered health benefits organization, to be calculated on the number of contributors of each organization, for the purpose of meeting the general administrative costs of Council.

 

The Council is the prudential regulator of the private health insurance industry.  Monies paid pursuant to this levy meet the day to day costs associated with the Council undertaking its functions as required by the National Health Act 1953 .

 

The reimposed Council administration levy will be able to be applied on each day specified in the regulations or, in relation to the supplementary power, on each day determined by the Minister.

 

The regulations are limited to imposing the Council administration levy a maximum of four times a year.  However, a supplementary power has also been provided for the Minister to determine (via disallowable instrument) up to two supplementary impositions per year.  The supplementary power may only be used to levy monies from the industry for unexpected administration costs associated with Council undertaking its functions.

 

Before the Minister may invoke the supplementary power, the Council must provide the Minister with written justification as to why the additional imposition is required.  Advice from Council must include: the proposed rate of imposition, the total amount proposed and a justification for the additional impost.

 

This Bill sets the maximum rate for the imposition of the Council Administration Levy to ensure certainty, without limiting or compromising the operational ability of Council.  The day to day rate will be set in the regulations or, if in relation to the supplementary power, set by Ministerial determination. The cumulative total of the Council administration levy and the supplementary Council administration levy may not exceed the maximum set in this legislation.

 

Validity

 

The original intent of the Council administration levy has not changed.  The functions Council performs and have performed have been at the behest of the Australian Parliament.  This legislation addresses a technical concern identified by the Australian National Audit Office.  As such this Bill validates the previous purported impositions of the Council Administration Levy by Council.

 



 

FINANCIAL IMPACT STATEMENT

 

The Private Health Insurance (Council Administration Levy) Bill 2003 is not expected to have any significant impact upon the finances of the Commonwealth.

 



 

 

PRIVATE HEALTH INSURANCE (COUNCIL ADMINISTRATION LEVY) ACT 2003

 

NOTES ON CLAUSES

 

Part 1

 

Clause 1:  Short Title

 

This clause provides that upon enactment this Act may be cited as the Private Health Insurance (Council Administration Levy) Act 2003 .

 

Clause 2:  Commencement

 

This clause provides for the commencement of the Act on 1 July 2004 to enable a seamless transition in the reimposition of the Private Health Insurance Administration Council (Council) administration levy between financial years.

 

Clause 3: Crown to be bound

 

This clause provides that this Act binds the Crown in each of its capacities.

 

Clause 4:  Extension of Act to external territories

 

This clause provides that this Act extends in its application to the Territory of Cocos (Keeling) Islands and to the Territory of Christmas Island.

 

Clause 5: Definitions

 

This clause provides a range of definitions for the purposes of the Act.  In particular this clause defines Council as the Private Health Insurance Administration Council established by section 82B of the National Health Act 1953 .  The functions of the Private Health Insurance Administration Council are set out in section 82G of the National Health Act 1953 .

 
Clause 6: Imposition of Council administration levy

 

This clause enables the Council administration levy to be imposed on each registered health benefits organization on:

 

·           Each day specified in the regulations as a Council administration levy day for a financial year; and

·           Each day (if any) determined in writing by the Minister as a supplementary Council administration levy day for a financial year.

 

Sub-section 2 of this clause provides that the regulations may not impose more than four Council administration levy days for a financial year.

 

Sub-section 3 of this clause provides for the setting via Ministerial determination of a maximum of two supplementary Council administration levy days for a financial year.

 

Sub-section 4 of this clause provides that the Minister’s determination in relation to the imposition of the supplementary Council administration levy is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 .

 

The purpose of the Council administration levy is to meet the administrative costs of Council.  The purpose is set out in the National Health Amendment (Private Health Insurance Levies) Bill 2003.

 

Clause 7: Rate of Council administration levy

 

This clause provides that the rate of the Council administration levy to be imposed on the Council administration levy day is the rate that is specified in the regulations.  This clause also provides that the rate of the supplementary Council administration levy is the rate determined by the Minister and applies on the supplementary Council administration levy day.

 

Subclause 2 of this clause sets out that the rate of the levy (including the supplementary levy) must be based on the number of contributors who contribute to the health benefits fund conducted by a registered health benefits organization.  As is currently the case a different rate may be set for contributors who contribute in respect of a single person and contributors who contribute in respect of more than a single person. 

 

Paragraph 2(c) of this clause provides for the rate to be set at zero.  The rate must not exceed the maximum rate (cumulative of both the Council administration levy and the supplementary Council administration levy).  The maximum rate is set at:

 

§   $2.00 for a financial year per contributor who contributes in respect of one person; and

§   $4.00 for a financial year per contributor who contributes in respect of more than one person.

 

The maximum has been set to enable Parliament to be certain as to the maximum rate.  The day to day rate for the Council administration levy will be set by regulation to enable flexibility whilst enabling Parliamentary scrutiny.

 

Sub-clause 3 provides that a Ministerial determination in relation to the supplementary levy is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 .  This retains a level of administrative flexibility as the supplementary power is to be used only for unexpected costs associated with the Council undertaking its functions.  However, Parliament is able to scrutinise the use of the power.

 

Clause 8:   Minister to obtain advice from Council

 

This clause provides that before the Minister makes a determination in relation to the supplementary levy power, the Minister must obtain and take into account advice from Council in relation to the following:

 

·           whether to make a determination imposing the supplementary Council administration levy, including a justification as to why the additional impost is required;

·           the day or days to be specified as the supplementary Council administration levy day or days for a financial year;

·           the rate that is to be specified as the rate of the supplementary Council administration levy;

·           the day or days to be specified as the census days or days for the supplementary Council administration levy day or days.

 

Clause 9: Validation of Council administration levy

 

This clause validates all previous Council administration levy payments.

 

Clause 10:  Regulations

 

This clause provides for the Governor-General to make regulations prescribing matters:

 

§   required or permitted by this Act to be prescribed; or

§   necessary or convenient to be prescribed for carrying out or giving effect to this Act.

 

Subclause 2 of this clause provides that prior to the Governor-General making regulations under the previous sub-section the Minister must take into consideration any relevant recommendations made to the Minister by the Council.